The financial support is coming in, for sure. The national government will spend another P447 million next year to carry out the Public Utility Vehicle Modernization Program (PUVMP), a member of Congress said last August 21.
“The fresh funding is on top of the P843 million allotted this year to support the program,” said Surigao del Sur Rep. Johnny Pimentel, House appropriations committee member.
“The government is likewise arranging to provide another P2.2 billion in low-cost financing to help PUV operators and drivers acquire the newly configured buses, vans and jeepneys under the program,” Pimentel said.
Once available, the P2.2 billion will be coursed through two state-owned lenders – the Land Bank of the Philippines and the Development Bank of the Philippines – at P1.1 billion each, according to Pimentel.
He said the P2.2 billion is lodged in the “unprogrammed appropriations” of the proposed P3.757-trillion national budget for 2019.
Unprogrammed appropriations “provide standby authority to incur additional agency obligations for priority programs or projects when revenue collection exceed targets, and when additional grants or foreign funds are generated,” according to the Department of Budget and Management.
“We have very high hopes that the modernization program, once completed, will offer the public an easier and safer way to commute in the years ahead, while enabling PUV operators and drivers to upgrade their vehicles,” Pimentel said.
“There’s also no question the program will help improve air quality, because the new PUVs are meant to comply with lower emission standards,” Pimentel, also House transportation committee member, said.
Pimentel also said he is counting on the program to help spur new jobs in the automotive sector.
All told, by the time the government consummates the P2.2-billion allotment, it would have chipped in a total of P3.490 billion into the PUVMP, a sizeable amount no matter how one looks at it.
Until you see the magnitude of the PUV industry in the Philippines.
The PUVMP is envisioned to replace some 200,000 jeepneys nationwide 15 years and older with new, safe and environmentally friendly public utility vehicles.
Let’s exercise basic math. If there are at least 200,000 old jeepneys nationwide that need to be replaced, then there must be some 200,000 jeepney drivers that stand to receive the government subsidy. Thus, each driver stands to receive P17,450 from the government.
Now let’s take the cost of a modernized PUV, say an Isuzu brand that complies with all the government standards (and is actually in use by at least two transport cooperatives in Manila and in Iloilo City). Each of this brand’s modernized PUV costs P2 million. If the bank approves a seven-year amortization program for the PUV, that would amount to a monthly installment of almost P24,000 (and that’s without interest). In effect, that P3.5-billion government subsidy wouldn’t even cover one month of the monthly installment of a modernized PUV. Assuming, of course, that each of those 200,000 or so drivers will opt to get one unit each of the new PUV.
But what if these new drivers do follow the government’s reformed franchising system under the PUVMP to reinforce regulatory supervision of PUVs?
The reformed franchising system, designed to build up accountability, enforcement and compliance, will see fewer new franchises issued to PUV operators and drivers who will be required to form themselves into cooperatives or firms.
In the case of jeepneys, for instance, each operator must have a minimum of 10 units to obtain a single franchise. Thus, drivers running their own units will have to band themselves into groups of at least 10 members to secure a franchise.
So, if a franchise operator gets the minimum 10 units, he or she needs to shell out some P20 million. If, for example, the operator bands together 20 drivers to share in those 10 units to ease the burden on purchase and maintenance costs, that would mean the total subsidy that the 20 drivers would get, at P17,450 per driver, would be P348,900. That amount hardly makes a dent when compared to the total purchase cost of the 10 units.
Still, a subsidy is just a subsidy, not a total dole-out. It’s meant to just jumpstart things. These new PUVs are expected to pay themselves off once the system gets going.
Officially launched in June 2017, the PUVMP is being put into action by the Department of Transportation (DOTr).
Under the program, all PUVs more than 15 years old will be phased out and replaced with new models equipped with automated fare collection systems, digital security and dashboard cameras, Wi-Fi Internet connectivity, GPS tracking devices and speed limiters.
The new PUVs will run either on electric batteries with zero exhaust gas emissions, or on Euro 4 compliant diesel engines that discharge 68% less particulate matter, 57% less nitrogen oxides and 50% less carbon monoxide.
Under the program, the DOTr will draw up new PUV routes in consultation with local government units.
An academy will also help reinstruct PUV operators and drivers on basic road discipline, courtesy and safety.
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